Did ‘Cranky Consumers’ Force Yahoo Out of Korea?

The entrance of U.S. Internet company Yahoo Inc.’s South Korean unit before it was closed.

Did South Korea’s “cranky consumers” play a part in Yahoo’s decision to close its Korean operations?

That’s one of the questions being debated online in South Korea on Friday, triggered by a blog post that local media have portrayed as being from a former Yahoo Korea employee.

In the post, titled “Foreign firms leaving Korea: Is this a victory for a homeowner who has driven out invaders?” the author, who didn’t give a name and didn’t respond to emailed questions, disputed a recent report by YTN Cable News Network that Yahoo’s departure was caused by the company’s failure to catch up with South Korea’s fast-changing IT trends.

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In the rebuttal, the author says the departure was brought about by the fact that “Korea is not a place for foreign companies to pursue success in an efficient way.” The writer notes Yahoo’s own statement about its departure and other statements made by global firms in announcing their withdrawal from South Korea:

The company will “…focus more attention on markets where we are best positioned to compete effectively” – Motorola

“The move is part of the Taiwanese manufacturer’s efforts to … focus on selling handsets in markets where it stands a better chance of success” — HTC

We will ‘…focus our resources on building a stronger global business that’s set up for long-term growth and success’ –Yahoo!

On New Year’s Eve, Yahoo closed its Korean operations for good, ending 15 years of business in the country where the local portals Naver and Daum dominate the search market. Yahoo Korea – once a force in the early 2000’s – accounted for less than 1% of search just before closing down. In October, the company said that “the Korean operation has been faced with a lot of challenges and has slowed Yahoo’s overall business growth for the past few years.”

Motorola, HTC, and Research in Motion closed their South Korea country offices in 2012. Goldman Sachs Asset Management in mid-November decided to leave the market and HSBC is trying to sell its retail banking business in South Korea.

The writer said Korean consumers need to be more willing to try out different services to have a more global perspective even though that might cause some inconvenience. Insufficient foreign competition will ultimately result in bigger dominance by Korean firms, which in turn will narrow the scope of options for consumers, the author warned.

The blog post received a mixed response. Here’s a selection of comments from online forums.

“I agree that Korea is increasingly turning into a market that foreign investors aren’t enthusiastic about and that global firms leaving the country might give investors a negative image about Korea.”

A screen capture of the blog

“Who would use bad service? Now I know why they (Yahoo) had no choice but to leave. It is their mindset to blame consumers for their own faults.”

“I don’t think what he’s saying is totally wrong. Monopolies infringe upon consumers’ rights. The government should take some action about it. But Yahoo will just be forgotten because it didn’t try hard enough. For many Koreans, Yahoo isn’t ‘foreign’ because it started its service very early. It is just not fair to think that Yahoo was ill-treated because it is a foreign firm.”

“It was no surprise that it was kicked out because it came to ‘invade.’ If it had come here to live harmoniously, it could have still been operating. But one thing we need to think about is how to solve the monopolization by local companies.”

As the blog post gained increasing attention, the author added: “This is my personal opinion. Yet it stirred more controversy than I had expected.”

The post has now been deleted. An official in Yahoo’s media department in Hong Kong referred questions to the company’s office in the U.S.